A baseball star in a ‘shark tank’: inside JPMorgan’s customer poaching line

Behind the scenes of a Super Bowl party at the home of retired baseball star Alex Rodriguez last February, a battle is raging over who will manage his multi-million dollar fortune.

On one side is Mary Erdoes, the powerful head of wealth and wealth management at US banking giant JPMorgan Chase, who is sponsoring Rodriguez’s party. On the other hand is Gwen Campbell, a financial advisor to Merrill Lynch who oversees most of Rodriguez’s fortune.

After Rodriguez introduced the two women, Erdoes asked Campbell to move the company and join JPMorgan, in the hope that Rodriguez would then move more of his money into the bank.

JPMorgan has been trying to recruit Campbell for months, with meetings in New York and promises to hire more people for her team, according to a California court filed Dec. 2, detailing a meeting between Campbell and Erdoes at Rodriguez’s party.

Campbell finally made the switch in October 2020 and was greeted with a call from Jamie Dimon, JPMorgan’s chief executive.

Joining Merrill, a division within Bank of America, Campbell is headquartered in San Francisco and brings with it client assets and nearly $1.4 billion in loans, including hundreds of millions of dollars from Rodriguez.

However, just over a year since joining JPMorgan, things have taken a turn for the worse. The situation has become a legal dispute between the bank and Campbell, who are arguing that her new colleagues are trying to poach her billionaire and multi-millionaire clients, of which Rodriguez is the primary target. .

She applied for a temporary ban against JPMorgan restricting a colleague’s ability to interact with her clients, as she seeks damages through arbitration for what she alleges is a breach of contract.

In a blistering 48-page legal filing, Campbell describes the turf battle between rival businesses at JPMorgan as a “shark tank”, alleging that her colleagues disparaged and demeaned her.

The bank said Campbell’s claims “have no merit and we look forward to presenting the matter to the court”.

JPMorgan filed an objection to the restraining order request, in which the bank said Campbell “did not identify a single lost customer or any net loss in the total assets she is managing”.

Rodriguez is not listed in Campbell’s profile but people familiar with the matter told the Financial Times that the “Pro-Athlete Client” mentioned in it was Rodriguez. Representatives for Campbell and JPMorgan declined to comment. Rodriguez did not respond to a request for comment.

The dispute that caused public tension between the separate but overlapping business divisions at JPMorgan was deepened when the bank acquired Bear Stearns during the 2008 financial crisis.

It also reflects the sometimes unwieldy structure of JPMorgan today, which has been the product of many consolidations over the decades.

JPMorgan Advisors, where Campbell works, is the long-standing financial advisory firm of Bear Stearns. It employs about 450 advisors and is housed in JPMorgan Wealth Management, whose chief executive officer is Kristin Lemkau and also owns Chase Wealth Management. JPMorgan Wealth Management is part of JPMorgan’s community and consumer banking division.

Within the separate wealth and wealth management division, run by Erdoes, is JPMorgan’s private bank with about 2,600 client advisors.

The model of JPMorgan Advisors is to use financial advisors, who are paid mainly in commissions. The bank’s relationships with wealthy clients are mainly formed through these advisors. Private banks also cater to wealthy clients but they tend to deal with general banks.

There is cooperation on what one unit offers but the other does not. However, they also sometimes compete for the same business, including lending and investment advice, a dynamic that can create tension.

“You don’t feel like you’re working at the same company. You feel like you’re working at different companies,” said a former JPMorgan executive.

The two divisions are in disarray, so transferring assets from one asset to another isn’t easier than if it were coming from an outside bank, a JPMorgan banker said.

Previous issues have been raised internally within Erdoes over the years, including one instance when a banker questioned why JPMorgan Securities, as JPMorgan Advisors, was able to provide certain services certain services at different prices, according to one attendee. Her response was that both companies are important to the bank and that they want to continue to grow both companies.

Dimon has also been aware of internal competition in the past, and his response was that bankers should pursue the business that JPMorgan doesn’t currently have rather than scramble for the business it already has. someone familiar with the matter.

Tensions can get especially heated when it comes to a client as famous as Rodriguez, who has raked in about $400 million in a baseball career spanning more than two decades. Since retiring in 2016 with the Yankees, he has gone on to become an investor, broadcaster and entrepreneur.

Before Campbell joined, JPMorgan’s private bank had been trying for years to win Rodriguez over as a client but so far he had only “a low seven-figure sum” with the bank, according to regulatory filings. Campbell’s agent. Even this, Campbell claims, was generated only by the fees paid to Rodriguez to appear at JPMorgan events.

Given that Rodriguez already had an account at the private bank, he was classified as a joint client between the two divisions when Campbell transferred his assets to JPMorgan Advisors.

Rodriguez also previously worked with JPMorgan to structure a bid for the New York Mets. The baseball team was eventually sold to hedge fund giant Steve Cohen in 2020.

When Campbell negotiated a move to JPMorgan, she included contract clauses to address concerns about overlapping interests between JPMorgan Advisors and the private bank, and the potential for internal conflicts, according to the report. her legal file. This includes a note that the approach to dealing with shared clients would be to “maintain the current nature of their relationship with the private bank”.

JPMorgan later argued that maintaining the nature of a relationship “is not the same as a promise never to engage with a customer about new business.”

Shortly after Rodriguez moved her fortune with Campbell’s move to JPMorgan Advisors, she claims her colleagues at the private bank began touting Rodriguez for the services she provided.

In an email to JPMorgan later, Rodriguez said he wanted “Campbell to lead the relationship at JPM that includes my personal assets and our corporate holdings, as well as investments in ventures. public and private investments, planning and capital raising”.

Tensions escalated when Rodriguez was looking for a loan to finance the purchase of a minority stake in Minnesota Timberwolves basketball team.

Rodriguez initially sought to secure the loan through Campbell and JPMorgan Advisors, but was eventually moved to the private bank, which Campbell alleges was “a ruse to forcefully restructure” Rodriguez’s relationship with the bank.

During loan discussions, a colleague allegedly called her “no one” and said she was “confused”. Campbell also claimed to have learned from customers that JPMorgan employees had made disparaging remarks about her.

In her protest, JPMorgan said the past two months have been the best time to generate revenue for Campbell since she arrived at the bank “despite her claims of an ongoing campaign to ‘cannibalize’ the business.” her business” and the bank credited her with the loan. and schedule her to get the commission for it.

In addition to Rodriguez, Campbell alleges that the private equity bank JPMorgan pursued business with at least two other wealthy clients, known as “the family trust of a billionaire who founded a private equity firm” and “a billionaire businessman who is a member of the Forbes 400 list”.

Campbell on Thursday filed with the arbitration court, seeking financial damages.

Also on Thursday was the first hearing in the northern district court of California against her injunction request against JPMorgan, which her attorney argued was necessary to prevent damage to her business. which is not financially viable.

Meanwhile, the upcoming Super Bowl is scheduled for February 13. It remains to be seen whether Erdoes and Campbell will join the same party again this year.

Additional reporting by Sara Germano in New York